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Rising Funds

Portrait of Yutaka Mogi of Nomura Holdings and Noriko Shimazu of Japan Search Fund Accelerator

Yutaka Mogi, Senior Managing Director of Nomura Holdings

Noriko Shimazu, Founder & CEO of Japan Search Fund Accelerator

Key Highlights

  1. Discover a unique solution to Japan's business succession issue through the rising popularity of search funds, offering a solution to retiring business owners and passionate individuals eager to grow and manage these enterprises, addressing the country's demographic challenges and preserving its cultural heritage.

  2. Uncover the fusion of local and international investors in Japanese search funds, balancing diverse preferences, managing potential conflicts, and leveraging their deep market knowledge to drive success.

  3. Explore the promising future of search funds in Japan as they provide a transformative path for succession, supporting local businesses, and contributing to sustainable economic growth while inspiring the next generation of chief executives and potentially expanding the model beyond national borders, shaping the landscape of business succession not only in Japan but also in East Asia and beyond.


Imagine a country where many businesses are on the brink of closure, their owners reaching retirement age with no successors in sight. This is the reality Japan faces today, as a looming business succession issue threatens individual companies, local communities, and employment. However, a unique solution is gaining traction amidst this challenge: search funds. These entrepreneurial acquisition models provide a solution for Japanese businesses, offering a path for passionate individuals to step in as successors and breathe new life into these enterprises.

An Unprecedented Frontier in Japan

Search funds, a unique entrepreneurial acquisition model that allows a 'searcher' to identify, acquire, and manage an existing privately held company, are gaining traction in Japan. With many business owners in Japan reaching retirement age, search funds present a promising solution to the country's succession challenges. Despite Japan's dire demographics, the potential impact of search funds is profound, as they address the shortage of heirs to businesses—a trend often overlooked in discussions about Japan's declining population.

Noriko Shimazu, a Stanford MBA graduate with diverse experience in corporate planning and venture capitalism, founded Japan Search Fund Accelerator (JaSFA) in 2018. It has emerged as a pivotal organization addressing Japan's business succession crisis. In partnership with Nomura Holdings, Japan's largest investment bank, JaSFA launched the Japan Search Fund Platform (JSFP) to invest in and support ambitious young entrepreneurs, known as "searchers," willing to take over small to medium-sized enterprises (SMEs) whose older owners lack successors (Slodkowski & Lewis, 2022). This platform aims to foster new career opportunities for young entrepreneurs and ensure the sustainable growth of Japan's economy. Currently, six search funds in Japan have been backed by a collaborative effort between JaSFA and a local bank, and JSFP has supported seven in partnership with JaSFA and Nomura. This includes two traditional search funds curated by Shimazu under the aegis of JaSFA. Meanwhile, in Vietnam, LT Partners has been bolstered by the funding and expertise of Shimazu and JaSFA. These strategic investments are cultivating the next generation of chief executives.

Investor Dynamics

Search funds in Japan attract a blend of local and international investors, typically comprising around 60% foreign and 30-40% local investment. This unique investor composition brings together deep knowledge of search funds from foreign investors and an understanding of local markets from domestic ones.

"This difference in preferences can create tension and conflicts among investors."

Shimazu sheds light on the dynamics between local and international investors, "I would say it is great to have both investors who know about search funds and also have knowledge of the local markets on your board. However, I have noticed that search fund managers often face difficulties due to the contrasting preferences of Japanese and international investors. Japanese investors prioritize companies with growth potential, regardless of recurring revenue percentages or typical search fund criteria. On the other hand, international investors tend to adhere more to traditional search fund criteria and seek larger investment sizes. This difference in preferences can create tension and conflicts among investors."

" our confidence in our market-fit model grows, we are considering broadening our horizons by opening our second fund to global investors..."

Shimazu further emphasizes the benefits of a localized approach, stating, "In our accelerator model, we initially relied on 100% local funding. This approach enabled us to gain a profound understanding of the market, identify profitable, high-recurring revenue companies by leveraging LP (Limited Partnership) networks, and assess the viability of an investment based on our market knowledge, thereby lowering communication costs. This localized approach has been instrumental in the industry's startup phase, providing the flexibility to address unique Japanese market characteristics and mitigate conflicts. However, as our confidence in our market-fit model grows, we are considering broadening our horizons by opening our second fund to global investors, thereby diversifying our investor base and amplifying our global reach.” Shimazu's insights highlight the challenges and considerations involved in balancing the interests of local and international investors in search fund operations. While the fusion of perspectives brings valuable insights, aligning investment preferences and managing potential discord remain essential aspects of successful search fund management.

To navigate these complexities, some Japanese fund managers have adopted an all-local model, raising capital solely from domestic entities. This approach fosters a deeper understanding of the local market and aids in identifying profitable growth companies with recurring revenue. By mitigating the risk of conflicts stemming from diverging investment styles, the all-local model provides a homegrown solution to the challenges other search funds face in Japan. Nevertheless, cultural factors present another layer of complexity for search funds in Japan.

Broadening Horizons

The shifting demographics in Japan, with many children of baby boomers relocating to cities and showing little interest in taking over their parents' small businesses, intensify the need for succession solutions. Although Japan's market is perceived as slow-growing due to a declining population and sluggish economic growth, some Japanese investors are looking toward the emerging markets of Southeast Asia. However, establishing a robust model in the Japanese market is crucial before venturing into these growth-rich markets. Having examined the dynamics of search funds within Japan, it is worth considering how this model might expand beyond national borders.

Yutaka Mogi, Senior Managing Director of Nomura Holdings, highlights some technicalities and potential conflicts that arise when considering international investors. Mogi explains, "There are some slight technical issues around this because of the taxation issue. Additionally, there might be incongruity among investors, as international investors often prioritize typical private equity-type returns. At the same time, some Japanese LPs, particularly strategic LPs, may have a different agenda, not solely focused on returns but also seeking local support for important local companies."

"This early insight can even precede an owner's decision to sell their company, giving searchers a strategic advantage."

Despite these complexities, Mogi emphasizes that the search fund model provides a strong differentiating factor compared to traditional private equity or M&A brokerage firms. He explains, "The significant advantage of our approach lies in the valuable contributions of local LPs. They provide searchers access to their extensive networks and deliver crucial information about potential target companies. This early insight can even precede an owner's decision to sell their company, giving searchers a strategic advantage. Moreover, having the backing of local financial institutions amplifies the value for searchers, granting them both financial support and market-specific guidance.”

Mogi's insights shed light on the complexities and advantages of incorporating international investors into search funds in Japan. While technical and conflicting issues may arise, the search fund model's focus on finding the right successor and creating sustainable returns for all investors sets it apart from traditional investment models.

Illustration of young businessman buying company from senior businessman, created in Midjourney.
Passing the Torch. Image created by author using the AI generator, Midjourney, 2023.

Rising Funds: A Promising Landscape

The rise of search fund platforms and the expansion of the market for such investments in Japan are inevitable. The increasing number of mergers and acquisitions among smaller companies, driven by the need for owners to pass on their enterprises while still enjoying the profits from a sale, further support the growth of search funds. The closure of businesses without a successor has adverse effects that extend beyond the individual companies, impacting local communities and employment. Promoting the search fund model can mitigate these detrimental consequences and preserve the cultural heritage these businesses represent.

Shimazu envisions a future of impactful investments and market transformation, stating, "Hopefully, we successfully invest in probably six or seven companies with our first fund and then move on to the second one, which we hope will be even larger. This will enable us to invest in more structures. We aim to continue investing in around five companies annually and create memorable success stories. Additionally, we aim to establish the core of our business in rural areas, not just limited to Tokyo. While we cannot invest in every company, we want to build a strong foundation in the market that will have a positive ripple effect. By doing so, we hope to influence and transform the entire market. Once we are confident in our capability to effectively support and empower young professionals into successful CEOs, we plan to expand our business to cater to a wider range of individuals and explore opportunities in Asia and other emerging markets. That is our plan, and I am hopeful it will come to fruition."

Case Study: Preserving the Future of Homecare – The Mediplus Succession Story

Mediplus Co., Ltd., a reputable home-visit nursing service known as Tatsumi Home-visit Nursing, faced a critical juncture in the heart of Kanagawa Prefecture. Founded and nurtured by Tetsuya Sezaki, Mediplus had grown into a premier homecare provider with 17 locations across Kanagawa and Tokyo. However, despite the company's significant growth and over 200 committed staff members, the question of who would lead the company into the future remained. At this critical point, Ryoma Matsumoto and the JSFP came into the picture (JaSFA, 2022).

Ryoma Matsumoto, a corporate investment professional at Mitsubishi Corporation, Japan's largest trading company and a native of Kanagawa, had a strong desire to contribute to his hometown's welfare. The JSFP saw in Matsumoto, an ideal managerial candidate to lead a company through a business succession. Matsumoto's determination to be a leader who combines effort with empathy struck a chord with Mediplus's owner and management team. His vision, drive, and strong ties to the local community impressed them, leading to their agreement to entrust Mediplus's future to him.

Under the agreement with JSFP, Matsumoto planned to use his investor's perspective and business development experience to drive growth measures, improve operational efficiency, and secure Mediplus's successful succession. He envisioned creating an environment where all staff members would feel proud and rewarded, with plans to expand the company and make it a leading name in the home-visit nursing industry.

His aspirations aligned well with the mission of JSFP, which aims to improve the corporate value of small and medium-sized enterprises and provide investors with profit opportunities in the private market. This partnership illustrates the power of search funds like JSFP in securing successful business successions and facilitating the matching of ambitious leaders like Matsumoto with thriving enterprises like Mediplus.

Under the dedicated leadership of Ryoma Matsumoto, the legacy of Mediplus/Tatsumi Home-visit Nursing is flourishing through the strategic application of the search fund model. Matsumoto has initiated numerous projects, many of which are already yielding significant results. He has improved the nurse hiring process, tripling the number of applications compared to pre-acquisition figures. His dynamic plans for the year include the inauguration of new stations, bolstering the company's presence in Kanagawa and beyond.

Matsumoto has also invested in enhancing the company's brand and culture. The positive shifts have been recognized by both staff members and industry players, and training sessions have been developed to ensure a smooth transition for new hires and to upgrade existing staff skills. His focus on performance measurement has led to the establishment of a new personnel assessment system, which ensures fair reflection of staff contributions and skills in their tenure and bonuses. He has identified key performance indicators and initiated tracking them, enabling more effective discussions with General Partners about future strategies. For instance, the staff utilization rate per station is improving through the transparent sharing of utilization rates with station leaders and collaborative discussions on how to enhance these figures.

Further demonstrating the value of his network, Matsumoto successfully recruited a top-tier Chief Operating Officer, further positioning Mediplus as a leading provider of home-visit nursing services. Matsumoto's dedication to his community and commitment to maintaining Mediplus as an industry leader exemplifies the role of search funds in ensuring the continuity and growth of valued businesses in the Japanese market.

A picture of Ryoma Matsumoto shaking hands with Tetsuya Sezaki as he takes ownership of Mediplus, and home nursing service Sezaki founded.
Ryoma Matsumoto (R) takes over Mediplus from founder Tetsuya Sezaki (L).

Conclusion: Seizing the Future

With the interplay of local and international insights and the unwavering commitment of passionate searchers, the future of search funds in Japan is promising. The model offers a unique solution to the succession needs of Japanese business owners and holds the potential for expansion into other regions, such as Southeast Asia and China. By exploring the exciting landscape of search funds in Japan, whether as a seasoned investor or an ambitious entrepreneur, you can actively contribute to shaping the future of business succession in Japan. Embracing this opportunity is crucial, not just for business owners but also for preserving Japan's cultural heritage and ensuring the continued success of its respected businesses. The JSFP, through its prescience in identifying and investing in promising succession opportunities, demonstrates its pivotal role in shaping the landscape of Japanese business succession.


JaSFA. (2022, December 28). JSFP第1号サーチャー松本氏、株式会社メディプラスを承継. プレスリリース・ニ

ュースリリース配信シェアNo.1|PR TIMES.

Slodkowski, A., & Lewis, L. (2022, January 26). Nomura Launches Fund to help “greying” companies find Young

Executives. Financial Times.


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